Red River Corporation Reports the Following Standards for Direct Labour

question 161

Essay

Red River Corporation reports the following standards for direct labour for the year:

During the year,180,000 finished goods were produced.The direct labour efficiency variance was $38,850 favourable.The direct labour flexible budget variance was $700 favourable.
Calculate the following items regarding direct labour for Red River Corporation for the year:
1.Direct labour price variance
2.Standard quantity of direct labour for actual production
3.Actual hours of direct labour incurred for actual production

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Definitions:

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity allowed, multiplied by the standard cost per unit.

Direct Labor Rate

The rate paid for the labor time per unit of work or hour worked by an employee directly involved in production.

Cost Drivers

Factors that cause the cost of an activity or process to change, affecting the overall cost of production.

Budgets

Financial plans that estimate income and expenditures for a specific period, often used for planning and control purposes.